With the New Hampshire primary complete, the field of presidential candidates will continue to become smaller. Some of those dropping out may lower their expectations to Vice President or go back to their day jobs. Registered investment advisers have to worry about those day jobs when it comes to campaign donations.
Under SEC Rule 206(4)-5, investment advisors are limited in their ability to give campaign contributions to political candidates who can directly or indirectly influence the hiring of an investment advisor by a government-sponsored investment entity. A campaign contribution in violation of the rule means the investment advisor can not collect fees from the applicable government-sponsored investor for two years. The rule applies to registered investment advisors and fund managers that had been exempt under the now-repealed, private fund manager exemption.
The president of the United States is not an office that can directly or indirectly influence the hiring of an investment advisor, so that position is not one that is limited by the SEC Rule. However, you also need to look at the candidate’s current office to see if that position is one that is limited.
Two of the remaining national candidates hold state offices: John Kasich and Chris Christie. They are both subject to SEC Rule 206(4)-5 because they appoint members to the state pension fund board in their states.
It’s not clear how the addition of a state governor (or other politician subject to Rule 206(4)-5) would affect past donations.
These are just the national candidates. As points out on his blog, there are dozens of candidates on the state primary ballots with over forty on California’s List of Generally Recognized Presidential Candidates for California Primary.
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